STAKEHOLDER TENSIONS IN THE SHARING ECONOMY UNFOLDED In the following, tensions will be identified along the lines of the five organizational criteria

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III. STAKEHOLDER TENSIONS IN THE SHARING ECONOMY UNFOLDED

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framework for the market. While in some cases there may be formal rules for who can obtain member status, in other cases this is more informally regulated (Ahrne and Brunsson, 2010).

There are a wide variety of different memberships in the sharing economy. In the case of free-of-charge fashion libraries (archetype two) for instance, there is no decision mechanism for who can become a member (Pedersen and Netter, 2015). With users and providers in this context basically constructing and using a common wardrobe, the organization is open to everyone that decides to register as a member and wishes to contribute. Tensions might arise between users and providers, with some fearing the risk of trading down if there is no barrier to membership and no control on the quality and brands that constitute the inventory.

In the case of Internet- or smartphone-enabled redistribution markets (archetype four) such as eBay or Poshmark, membership is only available to those that have access to the necessary information and communication technology, and who are living in the platform’s country of origin. Furthermore, most platforms require a credit card and a permanent address. Where conventional sharing practices were mainly found between family, friends and community-members, new types of sharing transactions take place between strangers, which comes with challenges in identifying their ‘true type’ (i.e., trustworthiness). Stakeholders may not always be who they appear or claim to be - a possibility that requires facilitators to put in place an element of screening or identity verification before access to shared resources can be permitted.

Possible tensions might also arise from high entry barriers, which are largely at odds with the common narrative that praises the sharing economy as an empowering, democratizing and inclusive force (e.g., Netter, 2016). Furthermore, membership might be susceptible to ethnic, aesthetic, or socio-demographic discrimination, as was found by Edelman and Luca (2014) in the case of Airbnb (archetype four). Moreover, the issue of membership and official labels of stakeholder groups is also linked to wider legal discussions, as can be seen in the case of livery-owner drivers for providers such as Uber (archetype four) (e.g., Orsi, 2013; Sørensen, 2016), raising questions as to whether Uber drivers should be considered employees of a

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transportation service or independent contractors of an electronic intermediary service. The legal label of stakeholders hence gives rise to issues such as public law violations (e.g., taxes, sector specific permits, unfair competition) and contractual challenges, forcing Uber drivers to insure themselves against accidents, illness, unemployment, and retirement (e.g., Sørensen, 2016; Eichhorst and Spermann, 2015). Closely linked to the issue of rules, membership status clarification might thus cause tensions for facilitators and user/providers alike (Brown, 2016).

Rules

Rules can concern any aspect of the market such as product design or prices, as well as any kind of behavior or action, i.e., user/provider behavior, and guides for the conduct of how to handle transactions and exchanges (Ahrne et al., 2014). Besides formal rules of participation, there can also be more informal rules or recommendations such as standards, for which

compliance is voluntary (Ahrne and Brunsson, 2010). While so far most of the sharing economy has operated in legal grey areas (e.g., Orsi, 2013), we have recently started to witness more and more regulation, deregulation, and self-regulation (e.g., Hartl et al., 2015) concerning issues such as consumer safety and protection, workers’ rights, and the safeguarding of established players and their employees, with different stakeholders taking different stances (e.g., Chang, 2015; Eichhorst and Spermann, 2015; Sørensen, 2016).

As highlighted with regards to membership in the case of Uber, Uber has adopted a rather confrontational approach in tackling the tensions with its users/providers and ‘others’, such as competing established taxi operations and governing bodies. Airbnb on the other hand, which has also faced quite a deal of opposition from competing industries, local communities, and governments on the state and local level, has chosen a rather collaborative path in its attempts to resolve conflicts and secure its survival in the marketplace. In the case of online and mobile redistribution marketplaces, rules, which are usually established by the facilitator, primarily

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pertain to transaction guidelines, inventory, community etiquette, logistics, return and complaint policies, as well as to guidelines for setting up one’s personal page.

Tensions arise due to unclear standards, procedures, fees, lack of customer protection, as well as uncommunicated sanctions (Netter, forthcoming). In contrast to these rather commercialized formats, there are fewer rules in free-of-charge fashion libraries. Rules established by the facilitators primarily concern the amount and duration of rental, condition of returned goods, and fees for delay or damages. While facilitators cannot further their economic interest in these non-profit environments, they can guide the stylistic orientation and inventory of this collective wardrobe, which is interesting for them in their additional role as user/providers. Possible tensions might arise from this double agenda and style dictate issued by the facilitators.

Monitoring

Just as in the case of rules, monitoring pertains to all aspects of the market. More specifically, it concerns how to monitor what members do, feel, and think (Ahrne et al., 2014). An element of monitoring is a prerequisite of sharing and other types of business models, as a system based solely on trust would eventually become vulnerable to the acts of less trustworthy stakeholders.

Besides more top-down monitoring strategies, where one stakeholder group holding the power monitors another stakeholder group in the market, mutual monitoring enables the deliberation of experiences and the evaluation of actions by all members.

Most online and mobile business models in the sharing economy rely on reputation-based systems in terms of monitoring and sanctioning individual actors on sharing markets (Cohen and Sundararajan, 2015). In terms of monitoring and sanctioning stakeholders or entire stakeholder groups, it can be hypothesized that narratives, constructed by ‘others’, are more powerful for inducing change and increasing self-regulation as a means to circumvent

foreseeable calls for more regulation by governing bodies. In the case of Airbnb for instance, media horror stories on people returning to find trashed apartments, rentals turned into

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brothels, and their identities and valuables stolen (e.g., Coldwell, 2016), have caused Airbnb to adjust its terms and conditions.

Mutual monitoring procedures are also in place in the case of most online and mobile redistribution markets. In most cases, facilitators have the opportunity to follow up on the individual transactions and shipping, by means of special payment systems and shipping labels. User/providers can give feedback to the facilitator as to whether everything went

smoothly or in case there are any concerns or complaints. Additionally, in many markets, users and providers have the opportunity to rate one other. The overall feedback system in the app-store is probably the most important feedback system. In this system, current or previous members provide feedback, not only to the facilitator but also to potential future members, which thus acts as a powerful gatekeeping mechanism. Tensions might arise in cases in which members feel wrongfully accused, transactions go wrong and the customer service of the facilitator does not respond to reports or take action (e.g., Netter, forthcoming).

In contrast, monitoring in free-of-charge fashion libraries occurs mostly in a top-down fashion, without formalized mutual evaluation mechanisms monitoring the satisfaction or dissatisfaction of the members (e.g., Pedersen and Netter, 2015). Facilitators check whether deadlines are met and remind members of their delay. Tensions might arise as members are only able to express their feeling about their experiences in this market via voluntary feedback, either in person or via the fashion library’s Facebook page, commentary which might go unheard, get deleted, or simply fail to reach enough members to create a critical mass to bring about change.

Sanctions

Sanctions can be both a positive or negative approach to enforcing members to do what they are expected to do (Ahrne et al., 2014). While positive sanctions provide incentives and rewards such as prizes, awards, and diplomas to reinforce preferable behavior, negative

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sanctions such as penalties, certificates, and boycotts, deny or impede access, further membership and participation in the market (e.g., Ahrne and Brunsson, 2010). Both types of sanctions have consequences for the status, identity, and resources of the recipient.

In the sharing economy, different forms of sanctioning can be identified. In the case of Uber for instance, public protests by taxi drivers calling for governments to intervene in the constant growth of Uber and other ride-sharing transportation providers, constitutes one form of negative sanctions (Stallibrass and Fingleton, 2016). In online and mobile-enabled redistribution

markets, both facilitators and user/providers make use of both positive and negative sanctioning mechanisms. Positive sanctions range from providing certain members with an elevated status – for example in the case of forum managers who act as an extension of the facilitator by directing extra attention to certain profiles or by generating more traffic to those featured shops or profiles, an activity that most likely results in a higher number of transactions and revenues for facilitators and providers. Negative sanctioning mechanisms by facilitators range from the hiding of provider listings to the temporary or permanent blocking of user profiles.

User/providers can sanction fellow user/providers with positive or negative reviews on their profiles, which will increase or decrease their chances of future transactions due to this trust-building mechanism and provide an incentive to follow the guidelines. User/providers can also sanction the entire marketplace (i.e., both facilitators and other user/providers) in their app store reviews by either praising the service and community or by highlighting their flaws and weaknesses. Tensions might arise for user/providers if expectations and evaluations do not match, there are perceived unfair ratings, listings are hidden, profiles get blocked for no apparent reason, or if only selected profiles receive positive attention or get featured.

Facilitators must handle the consequences of negative app reviews. As consumers perceive the reviews provided by other consumers on companies, services, or products as more

trustworthy than vendor testimonials (e.g., Walther and Parks, 2002), these reviews – which are

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for the most part outside of the control of the facilitator - are a powerful resources to tap into in order to judge the reputation of a market, form an attitude and potentially convince future members to shy away from choosing one product or service in favor of another altogether (e.g., Hong and Park, 2012).

There is no real sanctioning mechanism in free-of-charge fashion libraries as there is no mechanism for who can (or cannot) become a member. Membership usually lasts until someone actively revokes his or her membership. In most cases however, members simply switch from being active to passive users, in the sense that they stop making use of the library and its services. Membership status can also be revoked by the facilitator, for instance as punishment for disobeying the rules of conduct.

Hierarchy

Hierarchy in market organizations pertains to those who have the initiative and power, i.e., those whose decisions are binding for current and future members. These decisions are usually binding as long as members wish to continue as members (Ahrne et al., 2014). While it could be argued that the formal initiative and decision-making power is held by the facilitator, social order is in most cases emergent and negotiated as a response to pressure rather than decided proactively in advance. User/providers are often the sole providers of inventory for these

markets. The supply and demand side can exert pressure internally on the facilitator in terms of shaping the format of the marketplace. In a similar vein, ‘others’ such as communities, trade and labor unions, competing established industries, and others exert external pressure.

In free-of-charge fashion libraries, the formal initiative and power is in the hands of the

facilitators, as they develop the rules of conduct, which are binding, as long as one remains a member of the wardrobe. This power is frequently supported by a lack of competition in the case of these physical setups. Nonetheless, the survival of the library is highly dependent on the benevolence of ‘others’, who are facilitating the space of the market. In the case of

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Klädoteket for instance, a fashion library in Malmö, Sweden, the municipality is providing the building in which the fashion library is located. Without the support of this ‘other’, the fashion library facilitators would have to find another benefactor or adjust the business model, in order to be able to afford running the library.

The facilitators are thus incentivized to uphold a system that benefits and pleases their members in order to secure the support from ‘others’. In a similar vein, facilitators are

dependent on members supplying the library with inventory. Although they have the final say as to which items are allowed to enter the wardrobe, facilitators must be careful to balance their selective behavior with the constant need to attract new and interesting inventory that pleases demands by members for renewal and variety (Pedersen and Netter, 2015). Similarly, the formal initiative and decision making power is in the hands of the facilitators in online and mobile redistribution markets, as they develop the rules of conduct, which are binding, as long as user/providers in these markets wish to keep their membership status.

These markets may be considered facilitators’ markets, where the information asymmetry and its aftereffects are primarily to the benefit of the facilitator (Netter, forthcoming). In such a system, tensions might arise between user/providers and facilitators. However, with the constant emergence of new online and mobile marketplaces, competition is growing and switching costs are decreasing. Considering the impact of the various reputation systems, app store reviews tip the scale in favor of user/providers who have the opportunity and power to influence current and future possible members in their decision for or against any given platform.

Reviews, which are crucial for the maintenance and retention of the current membership base as well as for the attraction and adoption of potential new members, can thus be considered an avenue of tension. It is a double-edged sword for facilitators wishing to steer their reputation in a certain direction by purchasing likes and reviews. While the short-term benefits of such acts may be evident, facilitators must be careful to respond honestly to negative critiques and

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promote positive feedback organically in order to continue to be seen as trustworthy and maintain their license to operate.